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Louisiana Real Estate Commission v. Tessier

July 27, 1999



(Panel composed of Judges Edward A. Dufresne, Jr., Sol Gothard and Robert L. Lobrano, Pro Tempore Judge).

The opinion of the court was delivered by: Edward A. Dufresne, Jr. Judge.

LOUISIANA REAL v. TESSIER, 99-279 (La.App. 5 Cir. 7/27/99); ___ So.2d ___

These consolidated cases arise from a dispute between Ruth Ann Tessier, the prospective buyer of a house, and Laurence Lambert, its seller, over $52,500 in earnest money deposited with Bonnie Schultz, the seller's realtor, under the terms of a purchase agreement. The buyer asserted in a concursus proceeding between her and the seller that at the time she signed the purchase agreement she lacked contractual capacity, that the realtor knew or should have known of that incapacity, and therefore that the contract was a nullity, thus entitling her to return of the earnest money. She also brought a separate consolidated action against the realtor for damages allegedly suffered due to the realtor's inducing her to sign the agreement.

After a bench trial, the trial Judge found that the purchase agreement was invalid because Tessier lacked contractual capacity and ordered the earnest money returned to her. He nonetheless ordered Tessier to pay Lambert $10,000 in attorney fees and $1,017.65 in costs. In the consolidated suit, he found that Schultz knew or should have known of Tessier's mental problems and acted in bad faith in inducing her to sign the purchase agreement notwithstanding this knowledge. Based on these findings, he awarded Tessier $11,017.65 in damages against Schultz. Lambert now appeals that part of the concursus judgment returning the earnest money to Tessier, and Schultz appeals the damage award against her and in favor of Tessier. Tessier has not appealed the award of attorney fees and costs against her and in favor of Lambert. For the following reasons we set aside the judgment of $11,017.65 against Schultz and in favor of Tessier. In all other respects the matters appealed are affirmed.

Because of our Disposition of these appeals we need not recite the facts in detail, as they are well known to the parties. We do note the following particulars, however, as they are essential to understand our Disposition of the case.

There is no dispute that Tessier suffers from a bi-polar disorder, a mental condition that manifests itself in manic highs and severe depressions. That condition is controllable by mood stabilizer drugs such as Lithium, but will recur if that medication is discontinued. At the time of the events involved here, Tessier had not taken her medication for several months, and her personality was deteriorating. Two of her friends who testified at trial, Nikki Berger and Martha Sassone, noted that during that period she was nervous, had mixed thoughts, bounced from one subject to the next and was apparently drinking alcohol excessively.

Dr. Alvin Rouchelle, Tessier's treating psychiatrist, testified about her bi-polar disorder and the potential effects of her not taking her medication. He indicated that without the mood stabilizers she would experience periods of depression alternating with periods of manic highs, and possibly lucid intervals as well. He said that the manic periods could involve overconfidence, impulsiveness, racing thoughts, irritability, excessive energy, alcohol abuse and lack of sleep. When asked if these manic symptoms would be obvious even to a stranger he said that it would be hard to say, but that most people would notice that something was wrong and that the person was different.

Tessier's husband, Benjamin Birdsall, testified that in the months prior to the events involved in these suits his wife had become argumentative, was drinking excessively, and was acting irrationally at times. The situation had worsened to such an extent that in mid-August he decided to seek a divorce. Birdsall said that the event which precipitated his decision to end the marriage was his wife's reserving a $1,500 per night room at a downtown hotel for them to spend a weekend together while her school-age daughter was still at summer camp. Birdsall was not sure of the date of this incident, but Tessier said that she thought it was about August 20, 1996. Birdsall testified that during this time he did not have a clear understanding of his wife's psychiatric problem, and thought that her erratic behavior was due to excessive drinking. He further said that when he decided to file for divorce in August he did not consider where his wife might live during the course of the legal proceedings, nor did he consider having her interdicted. He did assert, however, that he never told her she had to leave their matrimonial domicile on Northline street when he decided on the divorce.

Tessier had a somewhat different recollection. She testified that at the hotel her husband told her not to come to their home again, but she later indicated that they reached an agreement that she could use the house when he was not there. In any case, Tessier and her daughter spent the next week or so staying with family, friends, and at hotels, spent one night at the Northline house, and on one occasion spent the night in her car. During this period she saw that the house at issue here on Tokalon Street was for sale. She walked around on the property and looked in the windows of the house but was unable to actually go inside. She contacted Bonnie Schultz, the selling agent, on August 27, told her that she wanted the house, and made a luncheon appointment with her for the next day.

Schultz met Tessier at the Northline house at about 11:00 AM on August 28, to discuss the Tokalon property. At about noon they went to the nearby Metairie Country Club where they met Nikki Berger for lunch. Berger testified that she soon realized that Tessier and Schultz were discussing the house purchase and further that Tessier was about to sign a purchase agreement for a house that she had not yet seen the inside of. She indicated that she was incredulous that someone would buy a house without seeing the inside and so stated to Tessier and Schultz. She also testified that Tessier was "very hyper. She was acting very bizarre, just pretty much crazy, you know, just acting not normal." Berger also testified that she knew Tessier was manic-depressive and took Lithium for this condition. She said that she assumed that she had stopped taking this medication during the summer because her behavior had become erratic and she was drinking a lot. She did not say whether Tessier was drinking alcohol during the lunch with Schultz. Finally, Berger said that she did not tell Schultz of Tessier's mental problems, nor did she inform Birdsall about the transaction. Berger left the luncheon after about an hour and knew nothing further.

Schultz testified that Tessier had called her about the house and set up a meeting on the following day. She had met Tessier at the Northline house late in the morning, and perceived her to be a person of means. Schultz was familiar with the Northline property from her experience as a realtor, and estimated the house to be worth three and one-half to four million dollars. They then proceeded to the country club for lunch. Schultz said that during the lunch, as well as during the several hours that she spent with Tessier that afternoon, she did not appear intoxicated and did not drink heavily.

During the lunch, Tessier made an offer on the Tokalon house of $525,000.00, and signed a purchase agreement for that amount. During the Discussions over lunch Schultz gave Tessier a Louisiana Real Estate Commission disclosure form informing her that she was acting as agent for the seller and setting forth that her duties to Tessier, the buyer, were those of honest and fair dealing and good faith, and to disclose all material facts about the property for sale. Schultz also gave Tessier Lambert's property disclosure form setting forth his knowledge of any defects in the property. Schultz said that she explained these documents and that to her knowledge Tessier understood these explanations. At About 3:00 PM Tessier had to pick up her daughter at school, and they then met Schultz at the Tokalon house and went through it.

The document signed by Tessier was a typical agreement to purchase which called for payment of ten percent earnest money, and she wrote out a personal check for that amount and gave it to Schultz. Tessier also indicated that the sale would be for cash and that she would not need any financing because the funds for the purchase would be available due to the impending divorce. Schultz said that because of ...

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